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SBI may cut down minimum account balance to Rs. 1,000

SBI is mulling slashing its minimum account balance (MAB) requirement. This comes days after the finance ministry reported SBI had earned Rs. 1,771cr from fines levied on non-maintenance of MAB during April-November'17.

Sources say it might reduce to Rs. 1,000, but no decision has been made yet.

It is also considering implementing a quarterly average balance requirement rather than monthly. Find details here.

In context: SBI mulls reducing MAB requirements after backlash

05 Jan 2018SBI may cut down minimum account balance to Rs. 1,000

SBI is mulling slashing its minimum account balance (MAB) requirement. This comes days after the finance ministry reported SBI had earned Rs. 1,771cr from fines levied on non-maintenance of MAB during April-November'17.

Sources say it might reduce to Rs. 1,000, but no decision has been made yet.

It is also considering implementing a quarterly average balance requirement rather than monthly. Find details here.

FactorsWhy does it need to levy a penalty anyway?

SBI has defended the penalty citing increase in expenses: one of its biggest expenditures is on the maintenance of Jan Dhan accounts and on linking Aadhaar with accounts.

Moreover, it provides many services in comparison to the penalty levied, including free cheque books, some free ATM transactions a month and free branch transactions, it said.

The earnings from MAB are "meager", it claimed.

HistoryMAB penalties were reintroduced this fiscal after five years

SBI had re-implemented MAB charges this fiscal year after a gap of five years. In April, it was fixed at Rs. 5,000, Rs. 3,000 and Rs. 1,000 for urban, semi-urban and rural branches.

However, after protests, the requirement was reduced to Rs. 3,000, Rs. 2,000 and Rs. 1,000 respectively from October 1.

Non-maintenance of MAB charges were also slashed by 20-50%.

Comparison with other major banks

Though SBI's MAB requirements are higher than most public sector banks, it is much lower compared to major private lenders. For example, Axis, HDFC, Kotak, IndusInd and ICICI need customers to maintain MAB of Rs. 10,000 for metros; for Yes Bank, it's Rs. 5,000.